Kwarteng says ‘let’s see’ on tax cut U-turn as speculation mounts
Kwasi Kwarteng tonight said “let’s see” in the face of questions about another potential tax cut U-turn, giving the strongest indication yet that there will be an about face from the government.
The chancellor told the BBC “my total focus is on delivering on the mini-Budget and making sure we can get growth back into our economy” during his trip to Washington, DC for the International Monetary Fund’s (IMF) annual conference.
He refused to rule out U-turns on any of the tax cuts in the mini-Budget as Number 10 holds crisis meetings today to discuss scrapping parts of it to calm financial markets and get her own MPs back onside.
When asked about a U-turn on Corporation Tax by The Telegraph, he said: “Let’s see.”
Discussions were held in Number 10 today over shelving more of the government’s planned tax cuts, after Truss and chancellor Kwasi Kwarteng U-turned on cutting the top rate of Income Tax last week.
It has been speculated this could mean changing course and sticking to original government plans to increase Corporation Tax for the UK’s most profitable companies.
A Number 10 spokesperson this afternoon also refused to deny that talks were being held over a U-turn.
“I wouldn’t comment on meetings that the Prime Minister has. She’s working from Downing Street today. There’s ongoing work,” they said.
It has been widely suggested that Kwarteng will have to step down if the mini-Budget has to be scrapped.
When asked by the BBC if he will be chancellor this time next month, Kwarteng said: “Absolutely, 100 per cent. I’m not going anywhere.”
When asked about the tax cut speculation, Kwarteng said: “I speak to Number 10, I speak to the Prime Minister all the time, and we are totally focussed on delivering the growth plan.
“What we were facing was a tax high of 70 years and no growth.”
Work and pensions secretary Chloe Smith also refused to rule out a U-turn at a think tank event today.
When asked about a potential U-turn, she said: “I think you know I’m not in a position to answer your question this afternoon.”
Long-term bond yields have fallen today, meaning that more investors are starting to buy government gilts, with speculation that this is due to market expectations of a U-turn.
The price of government borrowing has soared since the mini-Budget less than three weeks ago, with the markets spooked by the government’s plan to fund £100bn of energy support spending and £43bn of tax cuts by borrowing more.
It was expected that Kwarteng would announce spending cuts to balance the books and bring down debt long-term, however this is looking politically untenable.
Truss caused surprise yesterday when she told the House of Commons she was “absolutely” committed to not cutting spending.
Talk has shifted among Tory MPs about the possibility of removing Truss from office, just 38 days into her premiership.
Foreign secretary James Cleverly today said that “changing the leadership would be a disastrously bad idea, not just politically but economically”.